Kevin M. Wilson, PhD

Chairman/CEO

1405 Medical Arts Building324 W. Superior StreetDuluth, MN 55802

Office: 218-464-4399 Toll Free: 877-327-5062

Fax: 218-464-4397Email: info@bluewater-cap.com

www.bluewatercapitaladvisors.com

Bi-Monthly Market Review

“Consensus and Contrarian Bets” (Knowing When To Bet With Or Against The Herd)

May 15th, 2014 

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Ted A. Pavlovich, WMS

President/Wealth Mgmt.

Advisor

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INTRODUCTION

TED A. PAVLOVICH

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PIVOTAL INVESTOR CHOICES THIS YEAR

KEVIN M. WILSON

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Pivotal Choices (Consensus vs. Contrarian):1) Inflation/Interest Rates (Contrarian)2) Global Growth Cycle (Consensus)3) Market Valuations/Risk (Contrarian)4) Investment Themes (Both)

What Happens Next?

Inflation Low To Falling, Except for Japan

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Fed Policy Changing WithTaper; Inflation Outlook Uncertain; But Debt Has Not Fallen, Only Transferred

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Consensus: Global Growth Is Stable & Modestly Increasing

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2013’s Huge Return Driven By Higher Prices, Not Growth

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Price/GDP Very High;Expected Returns Can Go Higher Only IfThere’s A Correction

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Contrarian Bet: Low Yields For Long Treasuries

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Four Consensus Themes: El Nino, Energy, Food, Climate

ROTATION TO VALUE PLAYS WILL PERSIST

KEVIN M. WILSON

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Value Stocks Outperform

Most Stocks Are Priced Expensively

Value Measures:P/BP/EEV/EBITDAP/SP/CF

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Contrarian Bet:Value Investing WillTend To OutperformGiven High Avg. Prices

Value P/E’s Can Go Up

Dividends Can Help

If You Start With Cheap Prices, You Make More

The High Flyers Fell First,But The Avg. Stock Is AlreadyIn A Correction, Further Favoring Value Stocks

5/09/2014

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Some Examples of Potential Contrarian Value Plays

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EL NINO PLAYS WILL RETURN

KEVIN M. WILSON

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Warm Water in Equatorial Pacific Changes Precipitation Pattern

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El Nino Switches Off Upwelling In Western South America

Peruvian Fisheries Severely Impacted

El Nino’s Changes In Precipitation Patterns Affect Food Production,Coal Mining, Copper Mining

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But El Nino May FinallyEnd The Drought In The Western USA

ELECTION CYCLE WILL PROVIDE A Q4/2014 LIFT

TED A. PAVLOVICH

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The Four-Year USA Election Cycle Can Strongly Affect Markets

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Consensus: We Are Tracking The Avg. Midterm Election Year Pattern, But With More Volatility Than Normally Experienced

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SUMMARY

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KEVIN M. WILSON

(Both Consensus and Contrarian Plays Will Work This Year)

1. Inflation/Interest Rates Will Strongly Influence Returns2. Value Plays Will Outperform This Year3. Energy, Food, and Climate Plays Provide Opportunities4. The USA Election Cycle Will Drive Returns After The Correction5. We Are Excited About The Chance To Make Money Later This Year

Q & A

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KEVIN M. WILSONTED A. PAVLOVICH

This report is provided for informational purposes only and does not constitute an offer or solicitation to purchase or sell any security or commodity and is not intended to provide specific advice or recommendations for any individual. To determine which investment(s) may be appropriate for you, consult your financial advisor prior to investing. Any opinions expressed herein are subject to change at any time without notice. Information has been obtained from sources believed to be reliable, for its accuracy and interpretation are not guaranteed.

Investing in securities involves risk, including possible loss of principal. Past performance should not be taken as an indication of guarantee of future performance and no representation, express or implied, is made regarding future performance.

The firm does not provide tax advice; clients should contact their attorney, accountant, or other tax adviser regarding tax matters.

“BWCA is a state registered investment adviser in all states in which it is required to be registered. All Blue Water Capital Advisors’ customer assets are held in the customer name with Fidelity Institutional Services, clearing through National Financial Services (NFS), Member SIPC, a Fidelity Investments Company as Qualified Custodian.”

Disclaimer

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